NSW Landtax

Discussion in 'Accounting & Tax' started by Novice000, 14th Aug, 2017.

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  1. Novice000

    Novice000 Member

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    Hi all.

    I hope you can assist me with this situation.

    My living arrangement is this -
    - I own a place which I let my Mother live in for minimal rents, not even enough to cover rates and water. I spent half a week there so we can look after each other, her being old and I have a baby.
    - I also rent somewhere else with my husband for the other half of the week so we can live where we want to live and plus hubby doesn't want to live with MIL.

    The place where my Mother is was bought a 3 years ago, when I bought it there were tenants in there who left after 12 months after I bought the place then I decided to move Mum in there.

    Since owning the place, I have been paying landtax. The last bill was for the 2017 financial year, however recently I thought with my situation I may be eligible for it to be exempt as primary residence or at least get a discount since I do live there.

    Have any of you have had similar experience or heard of someone have had their land tax exempt with a similar situation?

    Thank you.
     
  2. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    No. It is taxable land. It is not your FAMILY principal place of residence. NSW Land tax rules require it be your principal place of residence together with your family. The meaning of the definition takes a strict approach and a place that is a temporary residence or a convenience is not eligible as exempt. You cant elect which property is your principal place of residence like say CGT laws (if there is a choice). At present NSW land tax laws may exempt the other place where you live provided you or hubby own it. Otherwise, no luck.

    The land tax would also be largely non-deductible as you charge minimal rent. All deductions get proportionately scaled back too.

    These non-deductible or largely non-deductible costs may be a CGT benefit - I hope you are keeping record of them.
     
  3. Zoolander

    Zoolander Well-Known Member

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    Thanks Paul. What type of record keeping - like noting down dates in a spreadsheets or book or something more formal?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Why not charge her market rent and claim expenses.

    Or

    Why not make it your principal place of residence
     
  5. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Hard for it to a 100% principal place of residence (land tax) or main residence (CGT) if family live elsewhere.
     
  6. MissP

    MissP Well-Known Member

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    I agree with @Terry_w, why not make it your PPOR since your home for the other parts of the week is rented. You can only claim one PPOR and you (or hubby) must own it.

    Otherwise charge your mum market rent, and negative gear it.
     
  7. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If she lives in it some days and hubby and kids dont it cant be a principal place of residence ...and not a main residence for CGT which also may need to be considered.

    Clause 2 of the exemption contains the continuously occupied rule

    Clause 4 can also be used against the owner.
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Don't forget the 6 year absence from PPOR rule.
    see clause 8 of Schedule 1A of the Land Tax Management Act - there appears to be no lease in place.
     
  9. Travelbug

    Travelbug Well-Known Member

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    Terry am I correct that the 6 year rule applies to CG, not to land tax? I've heard of people travelling full time that have had to pay land tax in the 6 years.
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You are half correct.
    There is a 6 year rule for land tax nsw. But only applies in limited circumstances such as if not leased out
     
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  11. skater

    skater Well-Known Member

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    Understandably, I wouldn't want to live with my MIL either.

    So....you are paying a mortgage on a property for your mother to live in, while she gets to live virtually rent free? Her being old doesn't negate the fact that she needs to pay for her accommodation and the maintenance of the building. If I was your husband, I would certainly not like this.

    I understand that you want to look after your mother, but you also have your own family to consider too. Why not put a small Granny Flat on the back of the property for your mother to live in, and you & your husband move into the house. You can fence the GF off, so that it's completely separate, so you & your husband have both the privacy of your own home, and the security of knowing that your mother is close by, so you can check on her.
     
  12. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    MissP and thesuperman like this.